What are the differences between nearshore and offshore outsourcing?

 Outsourcing a Software Development Project
Tech
Published Apr 19, 2021

In the previous article, we covered the topic of outsourcing and established that it is common practice with all kinds of organizations. We also listed the advantages and disadvantages relating to outsourcing software development in particular.

When the pandemic came upon us, our way of life was suddenly and completely changed for businesses and consumers alike. Everyone had to adapt to the new environment. This meant that from the safety of our own homes, using products from the technology industry, we could communicate effectively with our colleagues and with our families. Companies with digital solutions were able to help the world manage the crisis. In parallel business owners were forced into survival mode and had to take action quickly to deliver low-cost digital solutions to ensure continuity for their businesses.

Once you have decided to outsource your software development the next step is to choose your outsource provider. It would be worthwhile to consider the following:

  • Onshore - Partner is geographically proximate for example the same country or region.
  • Offshore - Partner is far away for example in a different continent.
  • Nearshore - Partner is in a different country but close in terms of distance and time zone.

Nearshore outsourcing

For this article we will stick to the two most popular types for outsourcing software development, nearshoring and offshoring. Nearshore outsourcing means that you hire a software development company located near your country with a similar time zone. The trend of choosing a nearby country as opposed to a faraway one plays a crucial role in accelerating the speed of digitization that is currently taking place globally. Working with the right partners is the most effective way to ensure access to the right skills, resources and capabilities to drive the digital transformation. An essential advantage of nearshoring is that communication is more likely to be easier from a logistical and a cultural point of view. In addition there will be more opportunities for the customer to meet the outsource team in person regularly as the distance is less of an issue.

Offshore outsourcing

Offshore outsourcing can be more competitive than nearshoring from a financial point of view. Many providers in far-flung places operate on low-cost bases and their rates can be very enticing. If this route is chosen it is important that the client company invests resources to ensure that communication works well on both sides, to ensure a positive outcome from the engagement. Offshoring can work well for a longer-term project where proper planning can be done to implement structures to mitigate the communication risks presented by different time zones. For example a “follow the sun” approach where teams overlap shifts to ensure increased output.

The pandemic has accelerated the digitization urgency for businesses because of the need to simply survive such an uncertain year. For entrepreneurs outsourcing provided an alternative opportunity to launch much needed digital solutions in a short space of time with minimal costs.

Whether you choose nearshore or offshore to meet your business needs, make sure you understand the legal, cultural and people implications.

Outsourcing can bring real benefits to your business. Perform research and choose an outsource partner that not only delivers a solution that is able to add value and contribute based on an understanding of your business and your industry. Find an outsource partner that has not only technical skills but also relevant business knowledge. In that way you will not only experience speed to market and cost savings but you are likely to end up with a better solution.

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